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Failure of Innovation Initiatives Could Impact the Long-Term Success of the Company:
−Removed: IBM has moved into areas, including those that incorporate or utilize hybrid cloud, AI and generative AI, quantum and other disruptive technologies, in which it can differentiate itself through responsible innovation, by leveraging its investments in R&D and attracting a successful developer ecosystem.
+Added: IBM has moved into areas, including those that incorporate or utilize hybrid cloud, AI, quantum and other disruptive technologies, in which it can differentiate itself through responsible innovation, by leveraging its investments in R&D and attracting a successful developer ecosystem.
If IBM is unable to continue its cutting-edge innovation in a highly competitive and rapidly evolving environment or is unable to commercialize such innovations, expand and scale them with sufficient speed and versatility or is unable to attract a successful developer ecosystem, the company could fail in its ongoing efforts to maintain and increase its market share and its profit margins.
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Risks from Investing in Growth Opportunities Could Impact the Company’s Business:
−Removed: The company continues to invest significantly in key strategic areas, including AI and generative AI, to drive revenue growth and market share gains.
+Added: The company continues to invest significantly in key strategic areas, including AI, to drive revenue growth and market share gains.
Client adoption rates and viable economic models are less certain in the high-value, highly competitive, and rapidly-growing segments.
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Further, international trade disputes could create uncertainty.
−Removed: Tariffs and international trade sanctions resulting from these disputes could affect the company’s ability to move goods and services across borders, or could impose added costs to those activities.
−Removed: Measures taken to date by the company to mitigate these impacts could be made less effective should trade sanctions or tariffs change.
+Added: Tariffs, international trade sanctions, and export controls on goods, technologies, inputs, and raw materials resulting from these disputes could affect the company’s ability to move goods and services across borders, or could impose added costs to those activities.
+Added: Measures taken to date by the company to mitigate these impacts could be made less effective should trade sanctions, export controls, or tariffs change.
In addition, any widespread outbreak of an illness, pandemic or other local or global health issue, natural disasters, climate change impacts, or uncertain political climates, international hostilities, or any terrorist activities, could adversely affect customer demand, the company’s operations and supply chain, and its ability to source and deliver products and services to its customers.
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In addition, as global opportunities and industry demand shifts, realignment, training and scaling of skilled resources may not be sufficiently rapid or successful.
−Removed: Further, many of IBM’s key employees receive a total compensation package that includes equity awards.
−Removed: Any new regulations, volatility in the
−Removed: stock market and other factors could diminish the company’s use or the value of the company’s equity awards, putting the company at a competitive disadvantage.
+Added: Further, many of IBM’s
+Added: key employees receive a total compensation package that includes equity awards.
+Added: Any new regulations, volatility in the stock market and other factors could diminish the company’s use or the value of the company’s equity awards, putting the company at a competitive disadvantage.
The Company’s Business Could Be Impacted by Its Relationships with Critical Suppliers:
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If errors, malfunctions, defects or disruptions in service are experienced by customers or in the company’s operations there could be negative consequences that could impact customers’ business operations and harm the company’s business’s operating results.
−Removed: The Development and Use of AI and Generative AI, including the Company’s Increased Offerings and Use of AI-based Technologies, Could Impact the Long-Term Success of the Company and its Reputation or Give Rise to Legal or Regulatory Action:
−Removed: IBM is increasingly applying AI-based technologies, including generative AI, to its services and products, to how it delivers offerings to IBM clients, and to its own internal operations.
−Removed: Additionally, IBM is investing in and offering new products and services associated with AI development, deployment and management.
−Removed: As stated more comprehensively and in context of several risk factors throughout this Item 1A., this increasing mix and application of AI-based technologies may impact IBM’s ongoing efforts to maintain and increase its market share and its profit margins or harm IBM’s reputation if the company does not continue to be recognized as an AI leader with strong governance processes.
−Removed: IBM’s drive for greater agility, productivity, flexibility and cost savings by continuously transforming with the use of AI may not yield intended gains in speed, quality, productivity and enablement of rapid scaling, which may impact the company’s competitiveness.
−Removed: The evolving global AI regulatory environment, including the enactment of the EU AI Act, may affect the company’s business and the company’s overall results of operations.
−Removed: Computer hackers and others routinely attack the security of technology products, services, systems and networks using a wide variety of methods, and the increased use of generative AI may introduce novel methods of attack.
+Added: The Development and Use of AI, including the Company’s Increased AI Solutions and Use of AI Technologies, Could Impact the Long-Term Success of the Company and its Reputation or Give Rise to Legal or Regulatory Action:
+Added: IBM is increasingly applying AI technologies to its services and products, to how it delivers solutions to IBM clients, and to its own internal operations.
+Added: Additionally, IBM is investing in and offering new products and services associated with AI development, deployment, governance, and management.
+Added: As stated more comprehensively and in context of several risk factors throughout this Item 1A., if the company does not continue to be recognized as an AI leader with strong governance processes or if our AI technologies do not work as intended or produce unexpected outcomes, IBM’s ongoing efforts to maintain and increase its market share and its profit margins, its reputation, and its competitiveness could be harmed.
+Added: Further, IBM’s drive for greater agility, productivity, flexibility and cost savings by continuously transforming with the use of AI may not yield intended gains in speed, quality, productivity and enablement of rapid scaling.
+Added: The evolving global AI regulatory and legal environment may affect the company’s business and the company’s overall results of operations.
+Added: Computer hackers and others routinely attack the security of technology products, services, systems and networks using a wide variety of methods, and the increased use of AI technologies may introduce novel methods of attack.
In the event of such actions, the company, its customers and other third parties could be exposed to liability, litigation, and regulatory or other government action, including debarment, as well as the loss of existing or potential customers, damage to brand and reputation, damage to IBM’s competitive position, and other financial loss.
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In addition, the failure of ecosystem partners to comply with all applicable laws and regulations may prevent the company from working with them and could subject the company to losses and affect its ability to bring products to market.
−Removed: Risks Related to Cybersecurity and Data Privacy
−Removed: Cybersecurity, Privacy, and AI Considerations Could Impact the Company’s Business:
−Removed: There are numerous and evolving risks to cybersecurity and privacy, including risks originating from intentional acts of individual and groups of criminal hackers, hacktivists, state-sponsored organizations, nation states and competitors;
−Removed: from intentional and unintentional acts or omissions of customers, contractors, business partners, vendors, employees and other third parties;
+Added: Risks Related to Cybersecurity and Data Protection
+Added: Cybersecurity and Data Protection Considerations Could Impact the Company’s Business:
+Added: There are numerous and evolving risks to cybersecurity and data protection, including risks originating from intentional acts of individual and groups of criminal hackers, hacktivists, state-sponsored organizations, nation states and competitors;
+Added: from intentional and unintentional acts or omissions, including the practices and investments, of customers, contractors, business partners, vendors, the open source community, the companies we acquire, employees and other third parties;
and from errors in processes or technologies, as well as the risks associated with an increase in the number of customers, contractors, business partners, vendors, employees and other third parties working remotely.
−Removed: Computer hackers and others routinely attack the security of technology products, services, systems and networks, like those we offer, using a wide variety of methods, including ransomware or other malicious software and attempts to exploit vulnerabilities in hardware, software, and infrastructure, and the increased use of generative AI may introduce novel methods of attack.
−Removed: Attacks also include social engineering and cyber extortion to induce customers, contractors, business partners, vendors, employees and other third parties to disclose information, transfer funds, or unwittingly provide access to systems or data.
+Added: Computer hackers and others routinely attack the security of technology products, services, systems and networks, like those we offer, using a wide variety of methods, including ransomware or other malicious software and attempts to exploit vulnerabilities in hardware, software, and infrastructure, and the increased use of AI technologies may introduce novel methods of attack.
+Added: Attacks may also include social engineering and cyber extortion to induce customers, contractors, business partners, vendors, employees and other third parties to disclose information, transfer funds, or provide unauthorized access to systems or data.
The company is at risk of security breaches not only of our own products, services, systems and networks, but also those of customers, contractors, business partners, vendors, employees and other third parties, particularly as all parties increasingly digitize their operations.
Cyber threats are increasing in number and sophistication, continually evolving, including with the increased use of AI, making it difficult to anticipate and defend against such threats and vulnerabilities that can persist undetected over extended periods of time.
−Removed: The company’s products, services, systems and networks, including cloud-based systems and systems and technologies that the company maintains on behalf of its customers, are used in critical company, customer or third-party operations, and involve the storage, processing and transmission of sensitive data, including valuable intellectual property, other proprietary or confidential data, regulated data, and personal information of employees, customers and others.
+Added: The company’s products, services, systems and networks, including cloud-based systems and systems and technologies that the company maintains on behalf of its customers, are used in critical company, customer or third-party operations, and involve the storage, processing and transmission of sensitive data, including valuable intellectual property, other proprietary or confidential data, and regulated data including personal information of employees, customers and others.
These products, services, systems and networks are also used by customers in heavily regulated industries, including those in the financial services, healthcare, critical infrastructure and government sectors.
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The company regularly addresses cybersecurity attacks and vulnerabilities.
−Removed: Cybersecurity attacks or other security incidents, including industry-wide incidents such as MOVEit, have or could result in, for example, one or more of the following:
+Added: Cybersecurity attacks or other security incidents, including industry-wide incidents, have or could result in, for example, one or more of the following:
unauthorized access to, disclosure, modification, misuse, loss, or destruction of company, customer, or other third-party data or systems;
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In addition, the fast-paced, evolving, pervasive, and sophisticated nature of certain cyber threats and vulnerabilities, as well as the scale and complexity of the business and infrastructure, make it possible that certain threats or vulnerabilities will be undetected or unmitigated in time to prevent or minimize the impact of an attack on the company or its customers.
−Removed: Cybersecurity risk to the company and its customers also depends on factors such as the actions, practices and investments of customers, contractors, business partners, vendors, the open source community and other third parties, including, for example, providing and implementing patches to address vulnerabilities.
Cybersecurity attacks or other catastrophic events resulting in disruptions to or failures in power, information technology, communication systems or other critical infrastructure could result in interruptions or delays to company, customer, or other third-party operations or services, financial loss, injury or death to persons or property, potential liability, and damage to brand and reputation.
−Removed: Although the company continuously takes significant steps to mitigate cybersecurity risk across a range of functions, such measures can never eliminate the risk entirely or provide absolute security.
−Removed: As a global enterprise, the regulatory environment with regard to cybersecurity, privacy, AI and data protection issues is increasingly complex and will continue to impact the company’s business, including through increased risk, increased costs, and expanded or otherwise altered compliance obligations, including with respect to the increased regulatory activity around the security of critical infrastructure, IoT devices, customer industries (e.g., financial services) and various customer and government supply chain security programs.
+Added: Although the company continuously takes significant steps to mitigate
+Added: cybersecurity risk across a range of functions, such measures can never eliminate the risk entirely or provide absolute security.
+Added: As a global enterprise, the regulatory environment with regard to cybersecurity and data protection issues is increasingly complex and will continue to impact the company’s business, including through increased risk, increased costs, and expanded or otherwise altered compliance obligations, including with respect to the increased regulatory activity around the security of critical infrastructure, connected devices, customer industries (e.g., financial services) and various customer and government supply chain security programs.
As the reliance on data grows for the company and our clients, the potential impact of regulations on the company’s business, risks, and reputation will grow accordingly.
−Removed: The enactment and expansion of cybersecurity, AI, data protection and privacy laws, regulations and standards around the globe will continue to result in increased compliance costs, including due to an increased focus on international data transfer mechanisms and data location;
+Added: The enactment and expansion of cybersecurity and data protection laws, regulations and standards around the globe will continue to result in increased compliance costs, including due to an increased focus on international data transfer mechanisms and data location;
increased cybersecurity requirements and reporting obligations;
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The company could incur substantial costs, including cleanup costs, fines and civil or criminal sanctions, as well as third-party claims for property damage or personal injury, if it were to violate or become liable under environmental laws and regulations.
−Removed: We do not expect climate change or compliance with environmental laws and regulations focused on climate change to have a disproportionate effect on the company or its financial position, results of operations and competitive position.
+Added: We do not expect climate change or compliance with environmental laws and regulations focused on climate change or environmental protection to have a disproportionate effect on the company or its financial position, results of operations and competitive position.
Tax Matters Could Impact the Company’s Results of Operations and Financial Condition:
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.